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You’ve heard the stories of athletes who file for bankruptcy within just a few years of coming into their seven-figure salaries. Or the lottery winners who are somehow living in a trailer shortly after collecting their prize money. There are situations such as winning, earning, or inheriting a large sum of money that we think solve someone’s money problems, but actually, only cause more issues. It’s devastating when you hear about it. It probably makes you wish you could have been by the person’s side and stopped them from buying that mansion or airplane when what they really needed to do was pay off their debts or open a retirement account.
Any time a major change happens to us in life, it can be difficult to update our habits fast enough to keep up with that change. Meanwhile, our old habits and our new reality don’t mesh. When that’s the case for a financial windfall, the consequences can be dire. And it’s so sad because there’s a sense that a once-in-a-lifetime opportunity to kiss money worries goodbye just slipped away. If you’re fortunate to go from having very little to quite a lot, it’s important to pause, reassess, and plan. We spoke with Patrice Washington (pictured below) about how to be prepared when unexpected money comes your way. Washington is the author of the forthcoming book Redefine Wealth for Yourself: How to Stop Chasing Money and Finally Live Your Life’s Purpose.
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Adjust your mindset
“How you spend $100 is likely how you’ll spend a million dollars. Now you have more access to make greater mistakes. But the way you behave with the money is going to be the same,” says Washington. That’s why she says that adjusting your mindset if you already know you aren’t disciplined is crucial when your financial situation changes suddenly.
